Proxy Blog

American Water Works 

April 13, 2018

The annual proxy for this utility company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Shareholder proposals on:
    -Human right to water
    -Lobbying disclosure
    -Political disclosure 

Magni voted as follows: 

  1. Magni voted for all proforma proposals.
    -Directors – The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation. The compensation levels are set using a benchmarking process.
    -Auditors – There appear to be no controversies with the financial statements of the company.
    -“Say-on-pay” – The proxy materials demonstrated that the board has more than considered shareholder feedback on executive compensation. In addition, the proxy materials disclosed the benchmarking done on executive compensation, including listing the peer group used in the benchmarking.

  2. Magni voted for and against shareholder proposals.
    -Against human right to water – If the proposal had only required disclosure, then Magni would have voted for the proposal. Disclosure is part of transparency, and transparency is a foundation of good governance. The proposal went further into policy advocacy by the company on specific water rights issues and those policies are beyond the scope of governance.
    -For lobbying disclosure – The company holds the position that it only needs to disclose information required by applicable jurisdictions. Per above, disclosure is important. Unless specific mitigating considerations are identified, the company should disclose more.
    -For political disclosure – The rationale for the vote is the same as lobbying disclosure.